Why rent controls are the wrong answer to a housing shortage
4 weeks ago | 17 comments
Labour MP urges government to consider rent controls amid rising rents
12:01 AM, 2nd July 2026, 5 days ago
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A Labour MP is calling on the government to introduce rent controls to curb welfare spending.
Margaret Mullane, MP for Dagenham and Rainham, writes in LabourList that rent controls are needed to tackle soaring rents.
However, industry experts warn that rent controls do more harm than good.
Driving councils to brink of collapse
Ms Mullane writes in LabourList: “As well as the financial impact high rent is having on families who are struggling, high private sector rents are also having a massive impact on the nation’s welfare budget and driving so many councils to the brink of collapse.
“The Housing Benefit bill has ballooned to well over £30 billion a year, with the majority of this going to private landlords. In addition to this sum, a further £3 billion is paid by local authorities on top of the HB payments.
“Given the focus that exists on curbing welfare spending as well as seeking ways to ease the cost of living, now is the time to look again at rent controls.”
Ms Mullane claims rent controls “are not a radical idea” and arguments against rent controls are short-term.
Arguments against rent controls are short-term
She adds: “Whilst I understand the arguments against rent controls, one being the theory that it would result in the mass sale of property, flooding the market and leading to a crash in house prices, I think this is short-termism.
“Many of our European neighbours have rent control systems. It isn’t a radical idea. France, Germany and Ireland have limitations on rent increases in areas experiencing a tight housing market. Ireland refers to these as ‘rent pressure zones’. I believe a similar model could be trialled in the UK at a local authority level in areas with significant social and economic pressures.
“However, as important as I think rent controls would be, to really get to grips with the chronic dysfunctional nature of housing demand and supply, a major increase in the stock of social rented homes must form the foundation of any strategy to tackle the housing and cost of living crises.”
Rent controls do more harm than good
However, as previously reported by Property118, rent controls do more harm than good.
According to the Institute of Economic Affairs (IEA), while rent controls may initially lower rents for existing tenants, they typically lead to higher rents in uncontrolled sectors and reduce housing supply and quality.
Even in Scotland, the rent cap has been blamed for soaring rents, which have increased by 11.6%.
Data by Hamptons reveals Scottish landlords are increasing rents at a faster pace than anywhere else in Great Britain because of rent controls reshaping the market.
Lead analyst at Hamptons, David Fell, said: “The evidence from Scotland suggests that rent controls rarely work as intended.
“At best, they delay rent increases; at worst, they set a new benchmark where landlords feel compelled to increase their rents every year by the maximum allowed.
“Faced with uncertainty over future rules, many landlords choose to raise rents little and often rather than risk falling far below market levels.”
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Member Since May 2018 - Comments: 2188
4:19 PM, 2nd July 2026, About 4 days ago
Reply to the comment left by David at 02/07/2026 – 15:54
I have been asked to take tenants by the Council before and I’ve not done it. I have also been asked by an organisation to take prison-leavers trying to rehabilitate themselves and again, not done it. Clearspring, Mears and Serco will all pay you as a landlord to house asylum seekers. I can’t take ‘homeless people’ or asylum seekers because neither my lender nor my insurer permits it. But I would have an open mind about doing it as the contract is with Clearspring, Mears and Serco and these companies have lots of money because they are using the Home Office’s chequebook. You don’t need to know who the tenants are: Your contract is with Clearspring, Mears or Serco.
When it comes to taking money from the Council or ‘local authority’ (somebody who under the Act is still permitted to pay you in advance) I would have even greater reservations about doing it now under the Labour Renters Rights Act than I would have had previously when no fault evictions were available as a backstop. Under the Labour Renters Rights Act the landlord is obliged to send all named tenants the Renters Rights Act Information Sheet. Supposing you haven’t send this sheet to all named tenants, because you did not know about the requirement for it to go to ALL named tenants. Or supposing there is some other minor new requirement that you didn’t know about and you end up having to go to court to get your property back. In the real world, what are the chances of the courts giving you your property back when the council have put their people in it and then 1-3 years down the line they either decide that they don’t want to pay you, or they decide that these tenants are not eligible for either the housing benefit or whatever else they have paid you on top of that?
This labour MP has complained about the ballooning housing benefits bill, plus an extra £3 billion pounds being paid by local authorities on top of the housing benefits payments.
But because the Labour Renters Rights Act stops you discriminating against benefits tenants and also places new restrictions on advertising (meaning that you now always have to advertise high), and because the Labour Renters Rights Act means that you now need to review and raise rents annually, it’s actually labour who are pushing up rents. It’s also labour who are making both housing benefits recipients and homeless people too high risk to house. And it’s labour that’s piling on extra costs of screening tenants because of its new antidiscrimination requirements.
It is GOVERNMENT that is driving up rents.
Member Since September 2018 - Comments: 3652 - Articles: 5
4:35 PM, 2nd July 2026, About 4 days ago
Reply to the comment left by Beaver at 02/07/2026 – 16:19
The RRA states that you cannot accept RIA or a deposit before an APT is signed. Even though the council will offer to pay the RIA and deposit this is irrelevant as it is the act of receiving payment before signing which makes it an offence under the RRA. Given you have no idea when a payment will be sent by the council once they agree it, you cannot be sure that the T will sign before this money is received
If an incentive payment is made to the LL at any time before the APT is signed on the basis it is for being able to offer a tenancy to someone on the council list, then this is not an issue with the RRA AND falls OUTSIDE of the TFA because a procurement or procurement-adjacent incentive is a financial arrangement between the local authority and the landlord.
Worth remembering.
Member Since May 2018 - Comments: 2188
5:26 PM, 2nd July 2026, About 4 days ago
Reply to the comment left by Reluctant Landlord at 02/07/2026 – 16:35
My understanding on this is limited but as far as I understand it a local authority is not a relevant person under the Tenant Fees Act 2019 and can make payments of rent before a tenancy agreement is signed. Furthermore, I’m not sure that the situation is the same as for other tenants if the local authority is trying to house homeless people.
My question really relates to what happens if you agree something with a local authority, you’ve got people in your property and the local authority decides to stop paying. Or the local authority decides after they’ve paid for people to live in your property that they shouldn’t have paid you in the first place.
My understanding of this is likely to remain limited, because I’ve no intention of entering into any contract with a local authority as I regard a local authority as high-risk.
Member Since November 2020 - Comments: 47
5:51 PM, 2nd July 2026, About 4 days ago
I always had low rents to keep tenants in “forever”. And it worked until governments stepped in, still have some over 20 years but now selling as they become empty and soon have to let the council house some very good tenants as l have to sell……..Sadly
Rent control? What about taxation control? Oh sorry, different if it’s the councils and governments
Member Since May 2025 - Comments: 89
6:37 PM, 2nd July 2026, About 4 days ago
Councils increased rent by CPI+1% which was 4.8% for this year compared to only 3.3% rent increase in PRS. Maybe Margaret Mullane should be calling for a rent control on council/social housing rent increases.
Member Since June 2026 - Comments: 5
7:45 PM, 2nd July 2026, About 4 days ago
I think that rent controls are an inevitability especially with devolution on the cards. Khan in london has always wanted them. And other Mayors will follow as there are always going to be more renters than landlords so why should they care about us.
In the short term I think Burnham will freeze rents for a while as he’s all about giving people “breathing space” in the cost of living crisis and landlords of course aren’t people. This will have the additional benefit for him of keeping the rental market stable in terms of rent, while the discussion goes on about the property land tax. And maybe also extending it while he brings it in.
So a double whammy for us as we aren’t able to react by increasing rent to offset the new land tax (which of course falls in the owner of the property).
At the moment I’m far more worried about the equalisation of CGT with income tax as this would be a very quick thing to bring in at the next budget. A big radical win for Burnham which fits with his agenda for redistributing wealth and supported by all of his potential chancellors. If anyone disagrees I would love to hear why. I’ve never wanted to be more wrong about anything.
Member Since May 2018 - Comments: 2188
9:36 AM, 3rd July 2026, About 4 days ago
Reply to the comment left by Ana at 02/07/2026 – 19:45
If Andy Burnham tries to tax assets and causes asset values to tank then he won’t raise much in capital gains tax.
The tax burden is presently the highest it’s been since 1948 just after the war, and we haven’t even had another war yet.
Andy Burnham needs to spend more on defence today than he is doing and if he doesn’t get economic growth he isn’t going to have enough money to do what he wants to do.